Solar-power startup Solyndra — one of the flagships of President Obama’s efforts to create green-energy jobs — has shut down, and plans to file for bankruptcy. Solyndra received $535 million in federally guaranteed loans to expand, and Obama once visited the company’s Silicon Valley factory to congratulate its workers on their bright future. But Solyndra says it just can’t compete with cheaper solar panels from China, and now its 1,100 employees are out of work. Is this a “political catastrophe” for Obama, or just a painful setback in the transition to clean energy?

Solyndra’s collapse proves Obamanomics has failed: This company was supposed to be part of Obama’s “green-jobs explosion,” says Ed Morrissey at Hot Air. Now it’s “a poster child for the failure of his stimulus, his green-jobs push, and social engineering in general.” Obama said Solyndra would demonstrate the effectiveness of his economic policies, and it did — the company never made a profit, and instead of creating jobs, it sent 1,100 people into the unemployment line.“Solyndra shuts its doors”

This is not Obama’s fault: “The investment our government made in Solyndra wasn’t a hand-out,” says Green for All. It was an attempt to “level the playing field” so Solyndra could compete with Chinese companies that receive up to 20 times more help from the state than U.S. firms do. This setback proves we need to invest more in “the inevitable green economy” — not less — unless we want to import our solar panels, batteries, and everything else from overseas.“Statement on the announced closure of Solyndra”

Clearly, there were better ways to spend the stimulus: If Obama really wanted to create jobs, says Logan Penza at The Moderate Voice, he should have targeted companies based on their “ability to compete.” But he didn’t want to anger Democrats, so he saddled taxpayers with debt to help green companies that liberals can love. Obviously, the economy would have been better off if he had spent the money in ways that were “cost-effective instead of merely politically convenient.”“The cost of politicized stimulus”

This is one of those great big giant “WE TOLD YOU STUPID DUMBASSES SO!” moments.

Go back to January of 2010, when Obama was giving yet another one of his endless pompous speeches talking about how he was going to save America by creating green jobs. Here’s what we were predicting:

Last night in the President’s State Of The Union Address, he mentioned ‘Clean Energy’ ten times, also hyping up Renewable power.

I want you to picture this.

You buy a brand new car straight off the showroom floor.

Each day of the week you drive that car to work. Out of the five days in the week you do this, your brand new car will only achieve the task once. The other four days you have to rely on alternative transport.

So! Do you think you would be happy about that?

I don’t think so.

Renewable power, be it wind power or the two versions of solar power have this same reliability. 20%.

Twenty Percent.

But hey, please don’t believe me. Believe the same Government who wants to sink hundreds of billions of your dollars into this highly unreliable form of generating electrical power. That same Government releases highly detailed statistics every month detailing exactly how much electrical power is generated from every source.

So then let’s look at Wind power first.

The U.S. has recently taken over from Germany as the largest producer of electrical power from this source. This is a link to the Wikipedia site, which in actual fact is quite up to date with the total Nameplate Capacity power produced from this source. Scroll half way down the page to where the chart table is. It shows the installed Nameplate Capacity of Wind Power in the U.S. as 35,159 MegaWatts. (MW) This is around the equivalent of 17 large coal fired or nuclear power plants, which can produce 2000MW of Nameplate Capacity power. So it actually seems to be quite a lot of power really.

However, that’s not how the power is consumed. It is consumed in KiloWattHours (KWH), and I’ll refer to it in that manner because that’s how you will all see it on your electrical utilities bill.

To work out how much usable power is made available to consumers is an easy calculation, although it looks complex.

The formula is NP X 24 X 365.25 X 1000. NP is Nameplate Capacity. 24 for the hours in a day. 365.25 for the days in a year, leap year included, and then multiply by 1000 to convert from MegaWatts to KiloWattHours.

So for all the wind power in the U.S. the formula comes out like this.

35,159 X 24 X 365.25 X 1000 which comes to 308 Billion KWH, if those wind turbines were to run at their maximum all the time. Now, we all know that they don’t so just how much power do they produce.

This link shows that exactly, and these figures are as of January 15th from the Government’s own website for electrical power, The Energy Information Administration.

Scroll to the bottom left there. That figure is expressed in Thousand MegaWattHours, which is the same as Million KWH, so the figure is 64.144 Billion KWH

So, if the feasible maximum total power is 308 Billion KWH, and the actual power delivered is 64 Billion KWH, then the overall efficiency rate of delivery of actual power amounts to 20.7%. What that effectively means is that it is delivering power for just on five hours a day, or the same as for the car analogy I used above, one day in five.

So tell me. Are you happy with that?

To put it in further perspective, see the Nameplate Capacity is the same as for 17 large coal or nuclear plants I showed above. The actual power delivered is around the same power produced by only three and a half of those 17 plants.

Are you happy with that?

You may think I’m being selective, so let’s then look at Nuclear Power. It delivers its power at the efficiency rate of 93%. Even coal fired power delivers its power at close to 88% when referenced to Nameplate Capacity and using the same formula.

That delivered power of 64 Billion KWH amounts to only 1.6% of the total power consumed in the U.S. There is positively and absolutely no way, ever, that total will even closely approach the hoped for 20%, and you could try until 2050. It will never reach 20%.

Look on that same page at Solar Power. Even with all the advances made in Solar Power in the last few years consumption of power from Solar generated sources actually fell, but then, who would really notice. This total amount of power produced from both solar sources amounts to 733 Million KWH, or 0.02% of the total power consumed in the U.S. To put that into some context, this is the same amount of power produced from ONE coal or nuclear plant every FIFTEEN DAYS. That is for every solar power plant in the Country. Solar power is currently delivering its power at the efficiency rate of around 12 to 15% at the absolute best, or around 3 hours a day. Try as you might it’s no point filling up the Deserts in the South West and in Texas with solar panels or mirrors, because there is no way you can then transmit that power the vast distances to where it is needed the most, in the North East. How much power would have been produced over the last few months of snow and blizzards in that North East? Zero. In fact, building them in the North East will never happen because of that.

Are you happy with those figures from Solar power?

Add the solar to the wind, and the total still only comes to 1.62%. Almost nothing.

This is not some imaginary political point I’m trying to make. This is just a bald statement of the facts.

These renewable plants are in the vicinity of five to seven times more expensive to get to the power delivery stage than for any other plant. They are more maintenance intensive and they only last for a third to half the time as for a large coal or nuclear plant.

All that aside, that power delivery rate of only 20% at the absolute best should be enough to convince you that these things are next to useless. The only way they can even get off the ground is with the injection of huge amounts of money in the form of Government subsidies. The only thing that they can absolutely ensure is that the cost of electricity to the end consumer will be much more expensive.

The analogy about the car at the top of the post is a relevant thing to allude to. Would you as a consumer but a car that you KNOW absolutely is only going to work one time in five.

Why should the same thing not apply here with renewable power.

This is one great big turkey that is never going to fly, no matter how much money you throw at it.

Taking into account that 20% power delivery rate, that means you will just have to rely on getting the required power for the remainder of the time from those other sources, so in all reality, the construction of these wind plants and solar plants at an alarmingly ever increasing rate will not really result in the saving of all that much in the way of Carbon Dioxide emissions anyway, as those coal fired plants will have to stay running to provide power for the bulk of the time these so called renewable plants are just not even working at all.

You can construct another million of them, and that percentage will not change.

So when the President is given a standing ovation for mentioning ten times the phrase renewable power and clean energy, this is one turkey that will just never fly. He can hope and change all he likes, but nothing will change that 20% figure.

This is most definitely not B+ material, In fact, if this paper was marked, an F would be a fair result, and in fact even an F is probably too high, and thankfully, the only reason it does get an F instead of just being thrown in the rubbish bin unmarked is that he actually did mention nuclear power generation as an option.

Two further posts on the ridiculous spin being put out there regarding renewable power, both of these dealing with Wind Power.

NEW YORK (AP) — Gripped by fear of another recession, the financial markets suffered their worst day Thursday since the crisis of 2008. The Dow Jones industrial average fell more than 500 points, its ninth-steepest decline ever.

The sell-off wiped out the Dow’s gains for 2011. It put the Dow and broader stock indexes into what investors call a correction — down 10 percent from the highs of this spring.

The day was reminiscent of the wild swings that defined the markets during the crisis three years ago. Gold prices briefly hit a record high, oil fell an extraordinary $5 a barrel, and frightened investors were so desperate to get into some government bonds that they were willing to accept almost no return on their money.

It was the most alarming day yet in the almost uninterrupted selling that has swept Wall Street for two weeks. Since July 21, the Dow has lost more than 1,300 points, or 10.5 percent of its value. It has closed lower nine of the 10 trading days since then.

For the day, the Dow closed down 512.76 points, at 11,383.68. It was the steepest point decline since Dec. 1, 2008.

The “10% decline” is the tipping point that defines a “market correction.”

But what is being “corrected”? The term “correction” implies that something was wrong that needed to be corrected.

Most of what I heard yesterday had to do with the ongoing fiscal crisis in the European Union, with the P.I.I.G.S. – Portugal, Ireland, Italy, Greece and Spain – just getting uglier and uglier.

Greece was bad enough. But now Italy is going into the crapper, and Italy is just “too big to bail,” to play off the phrase “too big to fail” that “justified” so many of the recent unprecedented bailouts.

I don’t doubt that the deteriorating situation in Europe is part of the crisis that is causing the gigantic selloff in the United States that is imploding all of our market indexes. And of course I could now get up on my soapbox and point out that, given that this failed socialist model is crashing down in Europe, WHY THE HELL IS OBAMA AND THE DEMOCRAT PARTY DOING THE SAME CRAP HERE?!?!?

And of course, that is still a valid question.

But I have a different theory as to what is going on.

I think this major market reversal is merely a delayed result of the completely artificial levels created by QE2. And QE2, of course, was the result of our own Obama Federal Reserve machinations.

The end of Quantitative Easing Two (QE2) will occur at the end of June 2011. This article is designed to provide an area for focused discussions about the design of counter-plays for a potential sharp reduction in equity valuations.

* Why would the end of QE2 cause a sharp reduction in equity valuation? In other words, how does QE2 work?

Quantitative easing is a monetary policy used by the Fed to stimulate the US economy. The Fed buys government bonds and other financial assets with new money that the Fed creates (out of thin air), thus increasing the money supply and reserves of the banking system. This action raises the prices of the financial assets bought, which lowers their yield.

As the Fed systematically purchases a substantial volume of long-term Treasury bonds and other financial assets (i.e., equities), large financial institutions (i.e., bondholders) shift their wealth into equities to achieve a higher return. In other words, the Fed’s actions reduce risk in the equities market which makes equities a more sensible investment than bonds. So, simply put, the Fed puts large quantities of money into the markets, inflating the price of equities. Money follows money, and up the market goes.

Of course, a few data points do not constitute absolute proof that quantitative easing is causal to a stock-market rise, or that stock-market increases cause increases in consumer spending.

However, the timing of the stock-market rise, and the lack of any other reason for a sharp rise in consumer spending, makes that chain of events look very plausible. Figure One shows us that shortly after QE1 was announced, the market free fall began to stabilize. After the QE1 program was expanded from 600b to 1.725 trillion, the market sharply reversed. When QE1 ended, the market once again reversed with about a 20% drop. That’s 200 S&P points (2,000 Dow points) over a two month time period.

QE2 was then suggested, and the market reversed. At the moment of decision, the market hesitated, then QE2 was announced, and once again, the market sharply increased. The time line of these events is perhaps more clearly demonstrated in Figure Two.

Figure Two

Note that as the Fed buys Treasures, the yield stabilizes at about 3.5%. Figure Three demonstrates a clear association between the Fed purchases and commodity prices.

Figure Three

* Consumer Spending and Increases in Share Prices:

Note – the source for this section is based on a published interview with Martin Feldstein, Professor at Harvard.

The magnitude of the relationship between the stock-market rise and increases in consumer spending also fit the data. Share ownership (including mutual funds) of American households totals approximately $17 trillion. So a 15% rise in share prices increased household wealth by about $2.5 trillion.

Relationship Between Wealth and Consumer Spending:
Historically, the association between wealth and consumer spending implies that each $100 of incremental wealth raises consumer spending by about four dollars, so $2.5 trillion of additional wealth would be expected to raise consumer spending by roughly $100 billion. That figure matches closely with a drop in household saving and the resulting increase in consumer spending.

Since US households’ after-tax income totals $11.4 trillion, an one-percentage-point fall in the saving rate means a decline of saving and a corresponding rise in consumer spending of $114 billion – very close to the rise in consumer spending implied by the increased wealth that resulted from the gain in share prices.

None of this appears to augur well for 2011. There is no reason to expect the stock market to keep rising at the rapid pace of 2010. Quantitative easing is scheduled to end in June 2011, and the Fed is not expected to continue its massive purchases of Treasury bonds after that.

Without increases in stock-market wealth, will the savings rate continue to decline and the pace of consumer spending continue to rise more rapidly than GDP?

Will the strong economic growth at the end of 2010 be enough to propel more spending by households and businesses in 2011, even though house prices continue to fall and the labor market remains weak? And does artificial support for the bond market and equities mean that we are looking at asset-price bubbles that may come to an end before the year is over?

* The Hedge Shack:

So what does the investor do? Based on what happened at the end of QE1, it appears we can anticipate a 15% to 20% drop in the overall market. Are their any market sectors that would provide safety?

QE2 is the economic equivalent of sugar in nutrition. Will it provide quick energy? Sure it will. Will that quick energy come at the expense of future health? You bet it will.

Right now, as a result of the Obama Federal Reserve’s policy of increasing the monetary supply by buying debt from itself (literally creating money out of thin air), there is more economic activity. Right now, as a result of this policy, credit rates are lower. Fewer banks and corporations are going under because of the ready access to cheap money. Investors see the stability and invest.

We should all feed our children tons of sugar, so we can enjoy the short term bonanza of frenetic activity.

Unless you worry about all the cavities, the weight gains, the diabetes, and of course that huge depressing crash with all of those catastrophic health consequences that necessarily come later.

The first time we ended QE1, the stock market lost 16% of its value in two weeks. Which is to say it didn’t work the first time for the same reason it won’t work this second time. Or a necessary third time, etcetera.

Talking about this new Keynesian tactic of quantitative easing with a financial whiz is kind of like the opposite side of talking to a financial whiz about gold. Gold is routinely pooh-poohed by financial whizzes because if people bought gold, they wouldn’t need all of the damned financial whizzes, now would they?

Now, let’s just say for the sake of argument that you were watching the Democratic National Convention in August of 2008 and came to the belief that the mainstream media coverage was so blatantly biased and dishonest that Barack Obama was going to win the election. And you had a vision of the sheer smackdown that would happen in this “God damn America.”

So you made an appointment with your portfolio manager and told her you wanted to cash out all of your stock holdings so you could put your investment nest egg into silver and gold.

What do you expect your portfolio manager would say? Do the words, “This is a big mistake. Trust me, the stock market is not going to collapse. The average gains of the stock market invariably outperform gold indices. Blah blah blah.” The bottom line is that if you pull your money out of the fund she manages, she’s not going to get any more of your money.

Well, the fool who did that would have bought all kinds of silver at about $13 an ounce and gold at about $825 an ounce. And that fool would have more than doubled his money while everybody else lost their shirt, then got part of their shirt back if they played the game right, then lost their shirt again.

And, of course, if that fool happened to be watching CNBC yesterday, he would have listened and laughed as the same sort of experts pooh-poohed gold because it went up in value to an all-time high before taking something like a $30/ounce hit. And the smart guys said, “See what happens when you put your money in gold and silver?”

And the fool was thinking, “Yeah. I more than double my money and laugh like a drunk monkey while everybody else runs around screaming like a bunch of Chicken Littles.”

It’s pretty much the same sort of thing with quantitative easing. Only it’s a lot more technical, and you’ve got to be a whole lot smarter and a whole lot more informed to make any money before the whole economy comes crashing down. And in the age of quantitative easing, boy do you ever need your financial whiz kid to help you plot your course

QE1 and QE2 were abject disasters. And I don’t doubt for a second that the “correction” that we saw yesterday – and from all accounts will see again today given the Asian market bloodbath – was in large part a delayed reaction to the end of the sugar high of QE2. Particularly given that Fed Chairman Ben Bernanke said, “There will be no QE3 for the moment, but QE2 won’t come to an abrupt halt at the end of June either.” Which is to say that nobody really knew when to start the selloff after the end of the last sugar high.

(CNSNews.com) – The real unemployment rate rose to 16.2 percent in June, the Bureau of Labor Statistics (BLS) reported on Friday, marking a return to levels not seen since January 2011.

The “real” unemployment rate is technically a combination of three measures of unemployment: the unemployment rate, the number of people working part-time who want full-time work, and the number of people “marginally attached” to the workforce.

Those who have left the workforce but would still like to be employed are considered marginally attached.

This figure is considered a more complete measure of unemployment because it captures a broader spectrum of those affected by the weak economy. Merely counting those who apply for unemployment benefits as “unemployed” does not fully account for everyone who is out of work or underemployed.

This real unemployment rate – known as the U6 rate – has been climbing since February 2011 when it was at 15.9 percent. Real unemployment peaked in October of 2009 at 17.4 percent, before falling into the 16 percent range for much of 2010.

It now appears that the real unemployment rate is returning to its 2010 levels, trending upward after staying slightly below 16 percent from February to May.

The total number of people who were truly unemployed in June was 25.3 million — the 14.1 million who were unemployed, the 2.7 million who were marginally attached to the workforce and the 8.6 million who were underemployed.

Here’s an official statistic from the BLS for all of you “Bush-blamers”:

Oh, yeah, that Bush was a real job murderer, he was. Good thing we’ve got Obama now righting all those Bush wrongs.

The problem is that Obama isn’t “right” about ANYTHING. Which leaves the American people pretty much screwed.

Understand something: the Obama administration assurred us that his $3.27 TRILLION stimulus boondoggle would have unemployment down to 6.5% by now. But rather than acknowledging that Keynesian economics just dug its own grave, hopped in, and covered itself up with dirt where it should remain for all eternity, we are instead met with statements of fanatic religious faith that “the stimulus saved us from a depression.”

This from the same bunch of geniuses who damn Bush for his overall 5.26% unemployment rate and absolving Obama for his 9.3% unemployment average during his three years to date.

5.26%. Bill Clinton paved the streets with gold, we are all told. And HIS unemployment rate average was 5.2% (i.e., pretty much the same as Bush’s). And then consider the fact that George Bush also had to deal with the Dotcom bubble collapse that began under Bill Clinton (which wiped out 78% of the Nasdaq stock exchange and vaporized $7.1 TRILLION in wealth) to go along with the 9/11 attacks and the two wars they necessitated.

Bush really doesn’t look bad at all, in hindsight to the failure Obama has brought America. But a failed demagogue Big Brother needs to have an Emmanuel Goldstein to bear the blame. That trick has been around since failed leaders have been around.

This is God damn America. And I suppose you can think of it this way: in God damn America, you DO have a job. In God damn America the only job you really need is the one you’ve got bearing the wrath of God for voting for the most evil president in American history.

President Obama seized on the one-year anniversary of the American Recovery and Reinvestment Act (ARRA) as an opportunity to take credit for the belated and tenuous economic recovery.

But the economy always recovered from recessions, long before anyone imagined that government borrowing could “create jobs.” And we didn’t used to have to wait nearly two years for signs of recovery, as we did this time.

A famous 1999 study by Christina Romer, who now heads the Council of Economic Advisers, found the average length of recessions from 1887 to 1929 was only 10.3 months, with the longest lasting 16 months.

Recessions lasted longer during the supposedly enlightened postwar era, with three of them lasting 16 to 21 months.

Keynesian countercyclical schemes have never worked in this country, just as they never worked in Japan.

The issue of “fiscal stimulus” must not be confused with TARP or with the Federal Reserve slashing interest rates and pumping up bank reserves.

One might argue that those Treasury and Fed programs helped prevent a hypothetical depression, but it’s impossible to make that argument about ARRA.

The “fiscal stimulus” refers only to a deliberate $862 billion increase in budget deficits. Importantly, only 23% ($200 billion) was spent in 2009, with 47% in 2010 and 30% in later years (according to the Congressional Budget Office this January).

How could the initial $200 billion have possibly had anything to do with the 5.7% rise in fourth-quarter GDP?

The Keynesian fable presumes that faster federal spending and consumers spending their federal benefit checks were the driving forces in the rebound.

Yet the GDP report clearly said the gain “reflected an increase in private inventory investment, a deceleration of imports and an upturn in nonresidential, fixed investment that was partly offset by decelerations in federal government (defense) spending and in personal consumption expenditures.”

Since federal spending accounted for exactly zero of the only significant increase GDP, how could such spending possibly have “created or saved” 2 million jobs?

The bill was launched last year amid grandiose promises of “shovel ready” make-work projects.

In reality, as the CBO explains, “five programs accounted for more than 80% of the outlays from ARRA in 2009: Medicaid, unemployment compensation, Social Security … grants to state and local governments … and student aid.”

In other words, what was labeled a “stimulus” bill was actually a stimulus to government transfer payments — cash and benefits that are primarily rewards for not working, or at least not working too hard.

First of all, believe it or not, America actually recovered from every single recession in its history without Barack Obama. And the longest recessions we’ve had have occurred during the period when elitist big government liberals were frantically pulling levers and pushing buttons.

“We have tried spending money. We are spending more than we have ever spent before and it does not work. And I have just one interest, and if I am wrong… somebody else can have my job. I want to see this country prosperous. I want to see people get a job. I want to see people get enough to eat. We have never made good on our promises… I say after eight years of this Administration we have just as much unemployment as when we started… And an enormous debt to boot!” – Henry Morganthau, FDR’s Treasury Secretary, May 1939 (Morganthau Diary, May 9, 1939 entry, Franklin Presidential Library)

For the record, the unemployment rate the month before this mea culpa had been a sky-high 20.7%. More than six years after FDR’s New Deal, more than 1 out of every five workers was unemployed.

Obama’s own expert (Christina Romer) pointed out that pre-FDR, pre-New Deal, pre-stimulus, and pre-Obama, recessions only lasted an overage of 1o.3 months. This one’s going to last a helluva lot longer in the age of Obama.

The next thing to consider is that the $24 trillion in TARP and other federal programs makes the $862 billion Obama stimulus – with only some $200-plus billion having been spent so far – look laughably puny in comparison. Obama’s claim that his stimulus saved the day is rather like the gnat telling the elephant, “I was pushing too. And it was my efforts that saved the day, not yours.”

Obama’s claim is laughable. And so is the mainstream media that has largely allowed Obama to continue making such a claim.

A third point is that it is simply a fact that all the Obama and Democrat claims of “shovel ready jobs” is just a lie.

“Even within the construction industry, which stood to benefit most from transportation money, the AP’s analysis found there was nearly no connection between stimulus money and the number of construction workers hired or fired since Congress passed the recovery program. The effect was so small, one economist compared it to trying to move the Empire State Building by pushing against it.”

Which is to say, the only thing that was ever “shovel ready” about the stimulus was bull crap. And the Democrats shoveled it high and deep.

Virtually all of the nowhere near 2 million jobs that were “saved or created” were government jobs. And government jobs are parasitic upon the private sector which taxes PAY for those government jobs. In other words, the government sector doesn’t produce; government jobs exist ONLY because of the productive output of the private sector, and the private sector taxes that provide the money for the government sector and all the bureaucrats on the payroll.

And what we have here is a case in which $862 billion plus interest has been sucked out of the private sector which actually creates the jobs that produce and given to the government. Which means less wealth for the private sector. Which means fewer private sector jobs. Which means less productivity. Which means lower tax revenues which fund the government payroll.

Which means we are in a vicious cycle. Obama is going to need to keep borrowing to pay the government workers on the government payrolls, which means less money for the private sector, which means fewer private sector jobs and less private sector productivity, which means lower tax revenues, which means more borrowing to fund the government sector jobs.

Which is why “Keynesian countercyclical schemes have never worked.”

Let’s look at the gigantic mess that Obama left Illinois in as an example of why this crap doesn’t work, and how Illinois has an $85 billion black hole of unfunded public employee pension obligations which it can never possibly hope to repay.

First of all, the government has a way of rewarding itself at the expense of the private sector over and over again. Thus:

“The level of pension benefits provided by the state’s plans generally exceeds those available in the private sector — i.e., available to taxpayers who pay the state’s bills,” the Commercial Club’s Martin contended in his report.

“Not wanting to implement dramatic cuts in spending on essential services, the legislature and various governors elected to instead divert revenue from making the required employer pension contribution to maintaining services like education, health care, public safety and caring for disadvantaged populations,” the center argued. “Effectively, the state used the pension systems as a credit card to fund ongoing service operations.”

Which is to say that first the government makes impossible promises, and then it engages in unsustainable and frankly insane policies to play their equivalent of budgetary Whac-a-Mole in order to juggle all the impossible competing spending priorities they’ve been insane enough to commit themselves to.

Which is exactly what happened in the case of the Obama stimulus. It was advertised as a “shovel-ready” package to create jobs, but instead it was “actually a stimulus to government transfer payments — cash and benefits that are primarily rewards for not working, or at least not working too hard.” And so money that was supposed to fund job creation instead went almost entirely to “Medicaid, unemployment compensation, Social Security … grants to state and local governments … and student aid.”

And jobs got sucked out of the economy.

To the extent that the Obama stimulus actually did any good, any benefit will be entirely consumed by the far greater harm it will do to the economy shortly down the road.

Fortunately, the claims that the Obama administration and the Democrat Party have made have been so inherently contradictory and so over-the-top fallacious that only six percent of Americans believe that Obama’s stimulus has created any jobs at all thus far.

Let me summarize what is going on: the Western world (and most definitely the United States) is playing the subprime loan game. We’re not talking about a few schmucks; we’re talking about the whole country.

We’re borrowing huge sums of money at a current rate of about 3% interest. But as the lenders start getting nervous, they’re going to want to increase that interest. We are in plenty of trouble paying these trillions of dollars back at 3% – but what happens if the interest increases to 5% or 7% as it could very quickly do? The costs of paying these loans would rise to catastrophic levels, and we could find ourselves literally bankrupt overnight.

That’s what happened to Greece. And it’s what’s ultimately going to happen to the USA.

It began in Athens. It is spreading to Lisbon and Madrid. But it would be a grave mistake to assume that the sovereign debt crisis that is unfolding will remain confined to the weaker eurozone economies. For this is more than just a Mediterranean problem with a farmyard acronym. It is a fiscal crisis of the western world. Its ramifications are far more profound than most investors currently appreciate.

There is of course a distinctive feature to the eurozone crisis. Because of the way the European Monetary Union was designed, there is in fact no mechanism for a bail-out of the Greek government by the European Union, other member states or the European Central Bank (articles 123 and 125 of the Lisbon treaty). True, Article 122 may be invoked by the European Council to assist a member state that is “seriously threatened with severe difficulties caused by natural disasters or exceptional occurrences beyond its control”, but at this point nobody wants to pretend that Greece’s yawning deficit was an act of God. Nor is there a way for Greece to devalue its currency, as it would have done in the pre-EMU days of the drachma. There is not even a mechanism for Greece to leave the eurozone.

That leaves just three possibilities: one of the most excruciating fiscal squeezes in modern European history – reducing the deficit from 13 per cent to 3 per cent of gross domestic product within just three years; outright default on all or part of the Greek government’s debt; or (most likely, as signalled by German officials on Wednesday) some kind of bail-out led by Berlin. Because none of these options is very appealing, and because any decision about Greece will have implications for Portugal, Spain and possibly others, it may take much horse-trading before one can be reached.

Yet the idiosyncrasies of the eurozone should not distract us from the general nature of the fiscal crisis that is now afflicting most western economies. Call it the fractal geometry of debt: the problem is essentially the same from Iceland to Ireland to Britain to the US. It just comes in widely differing sizes.

What we in the western world are about to learn is that there is no such thing as a Keynesian free lunch. Deficits did not “save” us half so much as monetary policy – zero interest rates plus quantitative easing – did. First, the impact of government spending (the hallowed “multiplier”) has been much less than the proponents of stimulus hoped. Second, there is a good deal of “leakage” from open economies in a globalised world. Last, crucially, explosions of public debt incur bills that fall due much sooner than we expect.

For the world’s biggest economy, the US, the day of reckoning still seems reassuringly remote. The worse things get in the eurozone, the more the US dollar rallies as nervous investors park their cash in the “safe haven” of American government debt. This effect may persist for some months, just as the dollar and Treasuries rallied in the depths of the banking panic in late 2008.

Yet even a casual look at the fiscal position of the federal government (not to mention the states) makes a nonsense of the phrase “safe haven”. US government debt is a safe haven the way Pearl Harbor was a safe haven in 1941.

Even according to the White House’s new budget projections, the gross federal debt in public hands will exceed 100 per cent of GDP in just two years’ time. This year, like last year, the federal deficit will be around 10 per cent of GDP. The long-run projections of the Congressional Budget Office suggest that the US will never again run a balanced budget. That’s right, never.

The International Monetary Fund recently published estimates of the fiscal adjustments developed economies would need to make to restore fiscal stability over the decade ahead. Worst were Japan and the UK (a fiscal tightening of 13 per cent of GDP). Then came Ireland, Spain and Greece (9 per cent). And in sixth place? Step forward America, which would need to tighten fiscal policy by 8.8 per cent of GDP to satisfy the IMF.

Explosions of public debt hurt economies in the following way, as numerous empirical studies have shown. By raising fears of default and/or currency depreciation ahead of actual inflation, they push up real interest rates. Higher real rates, in turn, act as drag on growth, especially when the private sector is also heavily indebted – as is the case in most western economies, not least the US.

Although the US household savings rate has risen since the Great Recession began, it has not risen enough to absorb a trillion dollars of net Treasury issuance a year. Only two things have thus far stood between the US and higher bond yields: purchases of Treasuries (and mortgage-backed securities, which many sellers essentially swapped for Treasuries) by the Federal Reserve and reserve accumulation by the Chinese monetary authorities.

But now the Fed is phasing out such purchases and is expected to wind up quantitative easing. Meanwhile, the Chinese have sharply reduced their purchases of Treasuries from around 47 per cent of new issuance in 2006 to 20 per cent in 2008 to an estimated 5 per cent last year. Small wonder Morgan Stanley assumes that 10-year yields will rise from around 3.5 per cent to 5.5 per cent this year. On a gross federal debt fast approaching $1,500bn, that implies up to $300bn of extra interest payments – and you get up there pretty quickly with the average maturity of the debt now below 50 months.

The Obama administration’s new budget blithely assumes real GDP growth of 3.6 per cent over the next five years, with inflation averaging 1.4 per cent. But with rising real rates, growth might well be lower. Under those circumstances, interest payments could soar as a share of federal revenue – from a tenth to a fifth to a quarter.

Last week Moody’s Investors Service warned that the triple A credit rating of the US should not be taken for granted. That warning recalls Larry Summers’ killer question (posed before he returned to government): “How long can the world’s biggest borrower remain the world’s biggest power?”

On reflection, it is appropriate that the fiscal crisis of the west has begun in Greece, the birthplace of western civilization. Soon it will cross the channel to Britain. But the key question is when that crisis will reach the last bastion of western power, on the other side of the Atlantic.

The writer is a contributing editor of the FT and author of ‘The Ascent of Money: A Financial History of the World‘

The United States is on life support, and it won’t be long before the doctor turns off the machine and calls the time of death:

“Within 12 years…the largest item in the federal budget will be interest payments on the national debt,” said former U.S. Comptroller General David Walker. “[They are] payments for which we get nothing.”

Economic forecasters say future generations of Americans could have a substantially lower standard of living than their predecessors’ for the first time in the country’s history if the debt is not brought under control.

We now expect the US budget deficit to rise to $1.64 trillion (11.2% of GDP) in fiscal year (FY) 2010 and to total $10.8 trillion (trn) over the next ten years. This profile is modestly above our early October forecast and well above the administration’s figures.

Even so, near-term risks lie to the side of a bigger deficit. Tax receipts have started the year in a deep hole and could continue to fall short. And if the economy struggles as the current dose of fiscal stimulus wears off, as we expect, then policymakers are apt to adopt more stimulus than we have assumed.

Barack Obama is a petty, vindictive man. And petty men do petty, vindictive things. He is the kind of man who deceitfully and cynically claimed that he would uniquely transcend the political divide – only to be the most politically divisive figure we have ever seen in the White House. And he is the kind of man who would cut off his nose to spite America’s face.

Case in point: the Obama job summit.

Obama gathered liberal economists (no conservatives allowed), pro-Democrat corporate CEOs, and union chiefs to tell him only what he wanted to hear.

But one business group was entirely shut out by Barack Obama, namely, the U.S. Chamber of commerce, which represents businesses that employ 115 million Americas (well more than half of the total U.S. work force). And, according to USCoC executive vice president of government affairs Bruce Josten, “Not only were we not invited, but not a single business organization HQd in Washington DC was invited.”

Small businesses create three out of every four jobs in America. Not that Obama gives a damn.

Just imagine a job summit which is openly hostile to the actual creators of jobs. Just imagine that job summit being depicted as being for the purpose of informing the president of all of the job-creating possibilities, when no one who disagreed with the president’s leftist views was even allowed to attend.

After agreeing with Judge Andrew Napolitano’s point that America is not going to have any meaningful job creation as long as the Obama administration continues recklessly printing, borrowing and spending trillions of dollars even as it utterly abandoning free market principles, Josten went on to say:

We need to get some certainty back in the American economy. And right now you have a business community that doesn’t know what their tax liabilities are going to be a year from now; have no idea what their health care costs are going to be next year; have no idea what their energy costs are going to be next year; and have no idea what kind of credit is going to be available next year. So this ‘big bang theory’ of using the crisis if you will – as the administration said some time ago – to move and overhaul entire swaths of the American economy, at this point is fueling uncertainty in the business community – and I would suggest to your listeners – in the American public. And that’s a prescription to defer making any decisions.

And let’s not forget other abominations to business such as the union-agenda-imposing “card check” that would massively add to businesses’ costs if passed.

In other words, YOU ARE THE PROBLEM, OBAMA.

For all of Obama’s demagoguing and demonizing the Bush administration, this is Barack Obama’s economy (and any real leader would have long-since quit trying to blame his predecessor and started taking responsibility for what is happening in the country during his watch anyway). It is HIS policies that have prevented the economy from recovering. It is HIS policies that are killing jobs by creating paralyzing fear and uncertainty.

According to Jesus (see Luke 14:28), any wise man sits down and counts his costs before beginning a project. But how can a business man do so in the climate of fear that Obama has created?

The unemployment rate also dropped because fewer people are looking for work. The size of the labor force, which includes the employed and those actively searching for jobs, fell by nearly 100,000, the third straight decline. That indicates more of the unemployed are giving up on looking for work.

The participation rate, or the percentage of the population employed or looking for work, fell to 65 percent, the lowest since the recession began. Once laid-off people stop hunting for jobs, they are no longer counted in the unemployment rate.

The bait-and-switch and shell games being played by the mainstream media and the White House propagandists continues at Titanic-about-to-plough-into-an-iceberg pace. Bad economic news that is not as bad as it could have been is projected as good news, while seriously bad news is buried in the 22nd paragraph of an optimistically-entitled and positively-spun article.

What we have is a numbers game in which actual unemployment could literally soar, even as the “official” unemployment rate actually decreases.

So I’ll leave it to you to figure out how the Obama administration could have argued on the one hand that the economy was the worst since, or even worse than, the Great Depression on the one hand, and then turned around on the other hand and said that they didn’t realize how bad the economy actually was. Because if you know anything at all about the terrible conditions of the Great Depression, you know that our present economic situation has never been even close to being as bad as the Great Depression.

EMANUEL: You never want a serious crisis to go to waste. What I mean by that is it’s an opportunity to do things that you think you could not do before. This is an opportunity.

The point is that this unemployment “crisis” is just another “opportunity” for Barry Obama to “fundamentally transform America” and pay off his pro-liberal corporate and union special interests doing it.

Obama’s decision to deliberately snub the U.S. Chamber of Commerce and the National Federation of Independent Business in a “job summit” was either pathologically petty, idiotically incompetent, or both. And the American people are going to suffer as a result.

If anybody should have been snubbed from attending the jobs summit, Barry Hussein, it was YOU.

As for the three-quarters of American workers who get their jobs from small businesses, well, screw you people. That’s the “change” you get.